Many of us associate ‘blockchain’ technology to the current hype of ‘bitcoin’. However, to only use blockchain for bitcoin investment is to forgo the business potential of this new disruptive technology. Below are some of the many ideas that you can apply blockchain to revolutionise your business.
What is a ‘Blockchain’?
Before we get into exciting business ideas, let us first cover the basics. A blockchain is a ‘shared digital ledger’, meaning that it is a shared database that all participants in the network can access, verify and update. The data which is stored in the blockchain are records of transactions of almost anything of value (for example, bitcoin). These records are known as ‘blocks’. A blockchain is decentralised, meaning that there is no central institution that regulates the network. Instead, every new transaction must be approved by all other participants in the network (usually done automatically by their computers). Once approved, a block is created (that is, a new transaction is recorded). An individual cannot alter nor delete the block. The blocks stay there forever, or in other words ‘immutable’ or ‘irreversible’. Accordingly, a buyer can look up the history of transactions and find out exactly where the product has been before landing in their hands.
Business Uses of Blockchain
The key benefit of blockchain is its high level of transparency, a result of its shared database. The ‘immutability’ of the blocks also ensure a high level of security. More importantly, blockchain eliminates the need for an intermediary (for example, an agent or stockbroker) in transactions. This means reduced time and costs, increased efficiencies and even new business models and markets.
So what are some business uses of blockchain?
1. File Storage
Every business has key confidential files that need to be stored safely. While you could simply save your documents onto your computer hard-drive or online cloud servers, these platforms are vulnerable to hacks or access by cloud storage providers.
With blockchain technology, you can split up your files into tiny encrypted blocks of code, and distribute them across millions of computers around the world. The idea is that you remain the sole owner and accessor of your file (i.e. no one else can view your files) while enjoying the top level security of the blockchain. This is what companies such as Storj and Sia.Tech have been working on.
2. Selling Intangible Property
The absence of an intermediary in the blockchain opens up opportunities for you to sell intangible property such as music, applications, intellectual property rights and shares directly to the buyer without paying any middle-man or platform service fees.
Conversely, consumers can directly pay you royalties for your creative work (such as music) without having to pay subscription fees to service providers (such as Spotify). Again, the ubiquitous record of transactions on the blockchain ensures transparent and undeniable evidence for the payment of royalties. Thus with blockchain, you can do away with distributorships and brokers so as to achieve significant cost-saving benefits and a simpler business model.
3. Product Traceability
This is ideal for those working in the food and manufacturing industry. As stated before, buyers can look up the history of transactions on the blockchain to determine the quality assurance of the product. Similarly, as a business owner or supplier, you can check the history of stages in the supply chain that a product has gone through in order to decide whether that product is fit for sale. As all information is on the database, this eliminates the need to go out and investigate every facet of the supply chain to identify the problem.
A recent example is the use of blockchain technology by World Wildlife Fund in the tuna industry to track the journey of tuna from “bait to plate”. To combat the problem of illegal fishing practices, every fish caught is now attached with a radio frequency tag which allows the location of the fish to be tracked and recorded onto the blockchain as the fish goes through the supply. Consumers and sellers can then scan a QR code on the fish’s packaging to access the blockchain record to trace the history of the fish’s journey and determine whether it was legally caught and compliant with fishing standards.
4. Supply Chain and Production Process Management
This is where ‘smart contracts’ come in. A smart contract is simply a block of code (that represents a contract) that automatically executes the terms of a contract when certain conditions have been met. Smart contracts operate on a ‘If (x) happens, then do (y)’ logic. Smart contracts are stored and operate in the blockchain.
Here, you can create a smart contract that sets particular conditions which the product needs to meet in order to advance to the next stage of the supply chain. All recorded on the blockchain. The fulfilment of those conditions can either be automated (e.g. the code can determine whether $x has been paid or not) or in the case of non-automatable conditions, be approved by the digital signature of a third party human (known as an ‘oracle’). If not all conditions are met, then the product will be ‘invalidated’ and not be recorded on the blockchain such that there will be missing ‘block’ on the database which will indicate that something went wrong with that particular product.
The use of smart contracts can thus streamline the supply chain or production process, saving you time and costs.
While blockchain is still in its infancy, it has already proven itself to have great potential in future business. So get creative and start thinking of ways to implement blockchain to improve your business!
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